Associations Seek To Combat Market Disruption

January 1, 2005

A coalition of textile and apparel trade associations from 54 countries has launched a renewed
effort to prevent China and perhaps one or two other countries from dominating international trade
in textiles in today’s virtually quota-free world.

The coalition, known as the Global Alliance for Fair Textile Trade (GAFTT), comprises 94 trade
groups in the US, Mexico the European Union and developed and developing nations throughout the
world. It held a two-day summit meeting in Washington this week to solidify its commitments to
joint actions that the associations hope will result in a new, permanent regime for textile trade
and to impress on US government officials in the administration and Congress what they see as an
extraordinary threat to their textile and apparel economies if nothing is done.

Delegates from 25 countries attended the meeting endorsed an ambitious eight point GAFTT plan
that among other things calls for use of the safeguard mechanism in China’s accession to the World
Trade Organization (WTO), agreement to impose new import quotas and an urgent review by the
WTO of the impact of the quota phase-out and how market distorting trade practices threaten to
monopolize trade in this vital sector in the hands of one or two countries. The textile issue is on
the agenda of a March 11, WTO meeting, and a number of safeguard petitions based on market
disruption or a threat of market disruption area pending before the interagency Committee for the
Implementation of Textile Agreements. While China has been the main focus of the coalition’s
actions, India has become its number two target.

With respect to China, the coalition cited what it called unfair trade practices that
artificially undercut the prices of every other country in the world. They named such things as
currency manipulation, export subsidies, free capital in the form of government loans and direct
state subsidies. The coalition also cited a World Bank report that says China will capture half of
the world’s apparel trade now that quotas have been removed and a WTO prediction that China and
India will take a 71% share of the global market. Allen Gant, chairman of the GAFTT, called on its
members to support the U.S. textile industry’s effort to get the US government to use the safeguard
mechanism, and to urge their governments to do the same. With respect to India, now seen as
possibly the number 2 problem, the textile industry representatives will compile data demonstrating
that India is using unfair trade practices, and it will call on the WTO to take appropriate
actions.

A statement issued by GAFTT said: “The crisis in textile and clothing trade is a global problem
requiring a global solution. That is why GAFTT is calling for timely and effective actions by all
countries, but especially the European Union, the United States and Canada.”